7 October 2020
Individual taxpayers and young Australians in particular have been targeted by the Federal Budget 2020-21 as a means to reign in youth unemployment and stem the decline in consumer spending, which is being experienced across Australia as part of the devastation brought on by COVID-19.
Under changes proposed by the Budget, businesses will be incentivised to employ young Australians through the introduction of the JobMaker Hiring Credit. The credit is proposed to be delivered as a cash payment to businesses that begin to employ Australians under 35 years of age, who are receiving the JobSeeker, Youth Allowance or Parenting Payment. The credit, which commences from 7 October 2020, is expected to have an immediate impact to boost the employment prospects of young Australians for up to 12 months.
To further promote the employment of young Australians, the Budget also proposes a Wage Subsidy for new apprentices, delivered as a cash payment to the employer, to subsidise businesses for the employment of new Australian apprentices or trainees. It is proposed the subsidy will apply to all employers, irrespective of size, industry or location, and is expected to support the employment of 100,000 new apprentices or trainees across Australia in addition to measures announced earlier in the year.
More broadly, the Budget looks to introduce tax cuts to low- and middle-income earners through:
- The effective reduction in personal income tax rates.
- Increasing the low-income tax offset from up to $445 to $700, delivered upon lodgement of the 2021 income tax return.
- The introduction of a ‘once-off’ low- and middle-income tax offset (LMITO) of up to $1,080.
The combined impact of these measures is estimated to deliver at least $2,000 of tax relief to more than seven million Australians when compared to the 2017-18 financial year.
Importantly, the reduction in personal income tax rates is proposed to take effect from 1 July 2020 so it will be backdated to this date, which should provide an immediate tax benefit to Australian households.
In all, through targeting the reduction in youth unemployment and provision of personal income tax relief, the Budget is set to deliver more cash in the hands of young Australians at a time that many are likely to need it most.
For more information on any of the announcements from Federal Budget 2020/21, talk to your adviser or contact the Findex Accounting and Business Advisory team.
For more Federal Budget coverage and news as it comes to hand, visit our Federal Budget Resource Centre.